2004 News Releases

DALLAS—The latest issue
of the Federal Reserve Bank of Dallas’ Southwest
Economy examines growth of the Texas economy, challenges
faced by small banks, and employment and output declines
in Mexico’s maquiladora industry.

In “Economic Recovery Gains
Steam in Texas,” senior economist Jason Saving
finds the state’s economy is stronger now than
six months ago and considerably stronger than one year
ago.

“Texas has not yet reclaimed
its position as a national leader, but it seems to have
caught up to the nation after spending a considerable
period behind it,” he writes.
The big question now, according to Saving, is employment.
Private-sector payroll employment shrank slightly during
2003 even as the state moved from recession to recovery.

However, there are hopeful signs
that hiring will pick up in 2004. For example, business
conditions are improving for some sectors of the Texas
economy, consumer spending and consumer confidence are
rising, initial claims for unemployment insurance are
trending downward, and firms are expressing an increased
willingness to hire. These suggest the ingredients for
job growth are now in place—and points toward
better times on the employment front in the near future,
Saving states.

In “Small Banks’ Competitors
Loom Large,” Research Officer Jeffery W. Gunther
and senior economist Robert R. Moore document small
community banks’ decline relative to their competitors
both within and beyond the banking industry. Since 1984,
small banks’ share of commercial banking system
assets has fallen by almost half.

The authors raise the possibility
that “the regulatory environment has evolved into
one that not only no longer protects small banks but
actually works against them.” Gunther and Moore
conclude by suggesting that policymakers may need to
assess regulations that might put small banks at a disadvantage.

In “Have Mexico’s
Maquiladoras Bottomed Out?” Vice President William
C. Gruben examines the country’s flagging maquiladora
industry in terms of chronic employment volatility and
sectoral differences. U.S. industrial production, exchange
rates and wage rate fluctuations all play a role, as
well as changes in trade policy and increased competition
from other Latin American countries, from China and
elsewhere.

With a U.S. recovery under way
and the recent peso softening, however, Gruben concludes
that “it is hard not to think that Mexico’s
maquiladoras have already bottomed out, even with further
declines in Mexico’s garment industry.”

Find the January/February issue
of Southwest Economy online at www.dallasfed.org.